Why the Internet’s Next Billion Users Will Be Mobile-Only

Noah Seelam—AFP/Getty ImagesIndian students use cellphones to photograph unseen Central Home Minister of India Rajnath Singh during a Run for Unity event to mark the anniversary of the birth of Sardar Vallabhbhai Patel in Hyderabad on October 31, 2014.

The personal computer in the shape of a notebook or desktop has taken computers as far as those shapes would allow. Now, the future of computing is only possible because of new shapes: That of tablets and, especially, Internet-connected smartphones.

Tablets will take computing beyond where it’s ever been before, getting computers into the hands of more people. The connected smartphone, however, will bring computing to everyone. More importantly, it will bring the Internet to everyone. More revolution will come from smartphones than from any previous computing product in history. It’s because of this that we will see a future with one billion more people online, a future only made possible because of mobile.

Smartphones are key to getting the next billion people on the Internet because they’re getting cheaper and more connected. Over the next decade or so, we will watch smartphones become a commodity. Estimates are that by 2020, quality, powerful smartphones could cost as little as $10, according to my firm, Creative Strategies. And the mobile web is already bigger than the desktop web, and it will soon dwarf the desktop web. The future of the Internet is mobile, and that reality has interesting implications.

Global Mobile Web Browsing

There was a debate last year around the disparity between web browsing in Apple’s iOS and the Android operating system. It seemed a conundrum — Android-powered devices had twice the user base, but much less of the global browsing share. Only recently has Android overtaken iOS in global web browsing share, and it is still very close, as this NetMarketShare chart shows:

When we include open-source Android and Google’s Android, Android has well more than double the active devices compared to iOS. But, given Android’s market share advantage, why that taken so long to become true?

The bulk of Android’s growth and market share is in the lower tiers of smartphone price bands. My estimates put premium Android price tiers at roughly 15% of the global Android installed base — meaning most of the people running Android are using devices much cheaper than Apple’s iPhones. This explains much of the global web browsing conundrum: Apple has a significant installed base of premium users, and those customers spend more time browsing the web and consuming Internet data. Simply put, Apple’s more affluent audience can more easily afford to liberally browse the web. Much of Android’s installed base, having to deal with expensive and slow mobile Internet connection times and no home Wi-Fi, could not.

This insight becomes even more clear when we look at this chart from Jana.com showing the number of hours of minimum wage work required to pay for the average data plan:

So, what is an ideal app size, especially in markets like India with challenged infrastructure?

The ideal size is 10-15MB globally. Idea size for an app for tier 2/3 countries (like India) is below 5MB. 500MB+ is a non-starter. At 50MB+ the conversion rates fall off dramatically. On Android and iOS, conversion rates dip by 50% in tier 1 nations for non-game apps above 50MB. In tier 2 and tier 3 nations, conversion rates dip by 50% for games above 15MB.

The Light Web

Understanding this, we should consider the role played by so-called “light apps,” apps that are either small downloads or operate entirely on the web — a Yelp-style app in India called Zomato, for instance, is a great example of a light app. While it’s true that native apps are still dominant, that only factors in the top 30-40% of the global mobile audience that has a smartphone and a data plan today. As connected smartphones’ reach extends to less affluent users, a healthy portion of those customers will be even more sensitive to the costs of data and size of applications they consume.

This is why the “light web” will be the connectivity method of choice for the next billion web users. Some companies, like Uber, have built robust web apps accordingly, increasingly powered by the cloud instead of running on users’ devices. It’s clear that we’re heading to a fascinating “light web” future, not only made possible by mobile devices but empowered by them. This future will post great challenges to many incumbents, but even greater opportunities for quick-moving innovators.

Ben Bajarin is the Director of Consumer Technology at Creative Strategies, Inc., A market intelligence and research firm. He focuses his analysis and research on all things consumer technology. He is a husband, father, gadget enthusiast, early adopter and hobby farmer.

The PC market has undergone incredible consolidation over the last five years, leaving only five or six brand-name players in a market which once had at least 17 serious PC vendors. Among the top of today’s list lies Dell, a company that over the last 15 months has gone through the kind of major changes that will determine if it’ll remain a major PC market player.

In early 2013, Michael Dell and his team made the decision to take the company private. That got serious pushback from some Dell investors, with the most intense recalcitrance coming from activist investor Carl Icahn. Icahn felt Dell was undervalued, and tried to take over the board and kick Dell out of the company. Dell and his team fought back, and in the end got major backing from Dell’s own personal wealth and private investors, enabling them to take the company private just over a year ago to great initial success — Michael Dell and his partner Silverlake has realized a 90% gain on their investment since they did this leveraged buyout, according to Bloomberg. The irony here is that Icahn might’ve been right that Dell was undervalued, Dell wouldn’t have seen this increased gain without Michael Dell at the helm.

I got the chance to speak with Michael Dell and some of his executives at last week’s annual Dell World consumer event. I’ve known Dell for decades, and during the final years before he took his company private, he often seemed very weary. Running a public company can beat a person down, and I’m sure the pressure to perform for investors took its toll on Dell.

That no longer seems to be the case.

Dell is the happiest I’ve seen him in a decade, more relaxed and reassured about Dell and its future. He still has pressure to perform and stay profitable, but that now comes from meeting the needs of his customers, not his investors. That means Dell can stay customer-focused and not have to deal with Wall Street and its various machinations that can distract a company’s executives. In fact, I know a few CEOs of public companies who are jealous of Michael’s newfound freedom, which makes it possible for Dell as a company to respond more quickly to market demands, be more nimble and more free to experiment.

More importantly, Dell has recently posted some serious growth. During Michael Dell’s Dell World keynote, he said the company delivered nothing but positive outcomes over the last year. Some of these results included seeing year-over-year growth across all regions globally, increasing worldwide PC shipments by nearly 10% year-over-year in Q3 of this year, which led to growing its market share in the North American market by 19%. It gained triple the share of HP, five times as much as Apple, and 10 times as much as Lenovo, making it the number three PC vendor in terms of worldwide shipments, behind Lenovo and HP.

Dell also said the company performed well in servers and storage, but during the Dell World event, the CEO told me that close to two-thirds of Dell’s enterprise business comes through its PC business. He added that he “loves PCs and is highly committed to creating new innovative laptops and desktops” to support his customer’s needs.

This is a big deal for Dell. Even if they’re no longer a growth market, PCs are not going away. They remain business workhorses and a key productivity tool for students and consumers. Dell having a company focus on creating great new PC and laptop designs is good news for those who will continue to buy PCs for many years to come.

“The company’s future strategy has been aligned to four customer imperatives — transform, connect, inform, and protect — which addresses the major technology trends of cloud, mobile, big data, and security,” Dell said in his keynote speech. “The company is highly focused on providing complete solutions to their customer, that includes helping them manage everything from the back end to all end points that connect to these servers and applications. While Dell has been doing this for years, there is a renewed commitment to deliver world-class solutions to IT and consumers. I see a really new Dell, and one that is committed to being a top-level company for the long run.”

At last year’s Dell World, Michael and his team had just won their battle against activist shareholders and taken the company private. At that time, the Dell team was optimistic about the company’s future without the pressures of Wall Street. However, it was too early to tell if a private Dell would be a successful Dell. Given what I saw at Dell World last week, I think it’s safe to say that Dell’s bet on themselves was a good one. If it continues to perform this way going forward, Dell will certainly remain one of the top PC players in the market for many years to come.

When I saw the original Samsung Galaxy Note a few years ago, I couldn’t believe it was actually a smartphone.

It sported a 5.3-inch screen and at the time, it looked more like a small tablet. But I was told that it was indeed a full-fledged smartphone, designed to be used as a phone as well as a small tablet.

When I picked it up and put it to my ear, I thought I looked ridiculous. In fact, in one of my columns at the time, I pointed out that something this large did not make sense for use as a phone given its form factor and what I considered its unruly size.

Yet the Galaxy Note struck a nerve in many regions of Asia and became quite a hit. In these markets, people generally only carry one device with them and with the Galaxy Note, they got a small tablet and a smartphone in one.

Now Apple has jumped in with a phablet of its own, which has immediately become a hit in all of the markets that it’s sold, including the U.S. and Europe. To be clear, the iPhone 6 with its smaller 4.7-inch screen is outselling the 6 Plus at least five to one, but there are still many people buying the 6 Plus who like its actual size. I am one of them. I struggled with which new iPhone to get but decided on the 6 Plus because of its large screen and the fact that I could read its screen without my glasses. Now I love it and feel like a hypocrite for dissing phablets in the past.

However, I will not put it up to my ear and use it as a phone, as I still think I look ridiculous putting something this size to my ear and talking on it. I might be the only one who feels this way, but I find that for me, a Bluetooth headset is the best solution. I use one religiously when making or receiving calls with the iPhone 6 Plus.

The Bluetooth headset I like the most has been the one from Bose. It fits in my ear well and delivers great sound, and the people who hear me on the other end say I come in clear.

I have tested over 15 headsets and while I especially like a couple of models from Plantronics and Jabra, so far I keep coming back to my Bose Bluetooth headset for use with the iPhone 6 Plus. However, I recently got to test a new Bluetooth headset that has the potential to become my primary headset. While it works like a Bluetooth headset with any smartphone, it’s unique in that this feature is secondary to its purpose.

The folks from Soundhawk, who make this new headset, call it the worlds first smart listening system:

Soundhawk was founded by one of the world’s leading hearing experts, Dr. Rodney Perkins. He started his career as an ear surgeon but quickly became one of the world’s most successful life sciences entrepreneurs. He has started twelve companies, four of which were in the hearing sciences and three of which went public. As a physician, he realized that there were limits to the number of patients he could help. As a result, he began to apply his knowledge and creativity to building products and companies that could have a much broader impact.

What makes the Soundhawk headset so different is that its main purpose is to help enhance and amplify the conversations around you, especially in noisy restaurants, sporting events, or any gathering when you want to hear people but it’s too loud to hear them clearly. This is not a hearing aid in the traditional sense, although its use to help people hear better has its roots in Dr. Perkins’ medical practice. He would often have people come to him thinking they might need a hearing aid but when they were tested, they didn’t have the aural problems that qualified them for such a device. Yet he understood that these folks had real issues with hearing, so he started Soundhawk with the idea of creating a headset that would help people hear better in noisy situations.

SoundhawkThe Soundhawk system from left to right: charging case, wireless mic, smartphone app and Scoop earpiece

The Soundhawk smart listening system consists of four components. The first is a smartphone app that gives the headset precise controls for four distinct situations. It can be fine-tuned for use indoors, when dining, when driving and for outdoor activities. Then there is the headset itself, called the Scoop. It’s smaller than my Bose headset and fits well in any ear. It uses adaptive audio processing to enhance key sound frequencies in order to elevate what you want to hear while reducing unwanted background noise.

Its third component is a wireless mic that gets you closer to what you want to hear in even the noisiest environments. You simply place the wireless mic near what you want to hear and it will pick up that sound and deliver it in great clarity to the Scoop. The wireless mic is perfect for noisy places like restaurants, coffee shops or even at home.

I spent last week in Honolulu working on a project, taking many meetings in restaurants. I took the Soundhawk mic and placed it on the table front of the person speaking, and even in these very loud environments, I could hear them clearly. The mic even has a clip on it, so if the environment you’re in is really loud, you could ask the person you’re talking with to clip it on their lapel instead.

One interesting thing about using the Scoop and the mic together is that when someone was talking to me in a noisy area, it was like the person was speaking only to me. Their voice came in loud and clear, making the conversation seem even more personal.

The fourth component is the case that houses the Scoop and the mic. The case has a rechargeable battery inside and protects, organizes and recharges them so they are always ready to go. This is a really cool feature. All other Bluetooth headsets need to be plugged into a wall outlet directly to charge them. This charges in the case and the case itself can be recharged over night. This is a very handy feature.

According to Michael Kisch, CEO of Soundhawk, “As our world gets noisier, many people are hearing less of what matters most. At Soundhawk, our mission is to transform the listening experience simply and affordably, and empower people to hear the world the way that they want to.”

The Soundhawk’s Smart Listening System launched recently, and at the moment is only available on the company’s website for $299. I realize that most high-end Bluetooth headsets are priced much lower than this, but keep in mind that this product has a lot of added value to it. It works on iOS and Android devices.

It’s an interesting product, and one I think will meet a need for a lot of people who would like to be able to hear better in noisy environments and also want a great Bluetooth headset for use with any of the larger smartphones on the market. Of course you could use this with any size smartphone, but at least in my case, it’s a perfect companion to my iPhone 6 Plus. Even though I have only been testing it for a week, it has the potential to become my primary headset.

Bajarin is the president of Creative Strategies Inc., a technology industry analysis and market-intelligence firm in Silicon Valley. He contributes to Big Picture, an opinion column that appears every week on TIME Tech.

Over the past five years, Samsung has become one of the big tech giants, enjoying a lot of success with its smartphones and tablets. It became a dominant player in China, Korea and other parts of Asia, and became Apple’s biggest competitor in the U.S., Europe and other parts of the world.

However, over the last two quarters, Samsung’s profits have declined substantially, with its executives recently warning that profits could be off as much as 60% in the most recent quarter. So in such a short time, how did a tech giant go from the top of the mountain to a place where it’s looking like the next BlackBerry?

The High-Tech Flea Market

This came about because of the Shenzhen ecosystem effect. Shenzhen is a large town about 30 miles north of Hong Kong and an important part of the China manufacturing area. What makes this area interesting is that it has emerged as a kind of technology parts depot that provides off-the-shelf components that can be used to create everything from smartphones, tablets, PCs or any other type of tech device, which can then be sold as no-name — or what we call white-box — products.

During my first visit to Shenzhen many years ago, I was taken to a six-story building that was affectionately called the flea market for cell phones. On every floor were dozens of vendors with glass showcases peddling cell phones and early smartphones by the hundreds. In Asia and many other parts of the world, users actually buy their cell phone of choice first and then go to a store to buy a SIM card that provides voice and data services.

In this part of China, the Shenzhen flea market was a hotbed for locals to come and buy their phones, providing all types of sizes and models to choose from. Most of the cell phones were of this white-box nature, carrying no known brand name and having been manufactured cheaply from readily available components. They were sold all over China and parts of Asia, and up until around 2007 when Apple introduced the iPhone, these types of phones dominated these markets.

Upstarts Aplenty

Over the last seven years, the Shenzhen ecosystem of component makers has become much more sophisticated, supplying high-quality components to vendors of all types, which are then used to make smartphones and tablets that can rival products from Apple, Samsung and anyone else making top of the line devices. And vendors from all over the world are making the trek to Shenzhen to buy these components, get them manufactured in quantity and take them back to their regions of the world to sell against established brands.

The best example of this comes from a company called Xiaomi, which didn’t even release its first smartphone until a few years ago but is now the number one smartphone provider in the region. It did this by leveraging the Shenzhen ecosystem to create well-designed smartphones. Until early 2013, Samsung was a top player in China, but big brand Lenovo jumped into the China market with smartphones and gave Samsung some serious competition. Apple also entered China in a big way. Between these three companies making aggressive moves in China, Samsung began to lose market share dramatically.

Micromax has done something similar in India, coming from nowhere to own 40% of that market today. Cherry Mobile did the same thing in the Philippines, and this similar pattern is being replicated in Brazil, South Africa, Eastern Europe and elsewhere — all markets that Samsung had leads in but where it’s now coming under major competitive threats.

Big Apple

Samsung has a double whammy going on here, too. One of the reasons the company has been so profitable in the mobile business is because of the Galaxy S4 and Galaxy S5 smartphones and the Galaxy Note 3 phablet. These smartphones are in the premium category and Samsung dominated the five-inches-and-up smartphone space for almost three years.

However, research is showing that Samsung benefited from a lack of a similar products from Apple, but now Apple has the new 4.7-inch iPhone 6 and the 5.5-inch 6 Plus. These products take direct aim at Samsung’s similar models and demand for these new iPhones has been very strong, so Samsung is impacted by this Apple move as well.

Hardware Headaches

What makes this even more problematic for Samsung is that its business model is to make money from the hardware. These white-box vendors can take these phones to their local regions and sell them pretty much at cost because they make their money on apps and local services that they provide their customers. Samsung and many of the other big vendors aside from Apple make most of their money on hardware, while Apple makes money on hardware, software and services.

When it comes to PCs, we have always had white-box products in the market. In fact, no-name white boxes represent about 40% of all PCs shipped. However, companies like HP, Dell, Lenovo, Acer, Asus and others have had solid brands and offered things like warranties and service agreements. Even though brand-name PCs are priced much higher than white-box PCs, the big players have been able to compete around the world based on brand, distribution and customer services.

This has been especially true in the U.S., Europe and most of the developed markets. However, if you look at what’s going on with laptops now and see how products like Chromebooks and low-end laptops and desktops are dominating consumer markets, even these major vendors are being squeezed when it comes to trying to actually make money just on hardware.

We are starting to see new PC players go to the Shenzhen components market in order to create PCs to sell in their home markets. Once there, they add local apps and services while pricing these laptops and PCs almost at cost. If they gain more ground in these local markets, this could have real impact on traditional PC vendors who are still trying to compete in these markets but have to make profits from hardware alone in most cases.

For Samsung, the Shenzhen effect is a serious problem — one that will be very difficult to counter while still maintaining profitability. Even with new hardware products, Samsung’s lack of software and services for local markets will continue to make it difficult to compete with Xiaomi, Huawei and others, especially in markets like China and other parts of Asia.

Even worse for Samsung are rumors that companies like Alibaba and Tencent may jump into these markets with smartphones of their own in the next year. Both of these Chinese companies have strong local services they can tie to these smartphones, allowing them to almost give these devices away since they are assured an ongoing stream of revenue from preloaded apps and services.

The Shenzhen ecosystem will continue to be a disruptive force as hardware becomes commoditized and real money is made from apps and services. Companies just selling hardware will continue to be challenged by these upstarts, who can buy components cheaply and get them manufactured cheaply. This can leave even the big tech players hurting, as we’re seeing now with what’s happening to Samsung.

Bajarin is the president of Creative Strategies Inc., a technology industry analysis and market-intelligence firm in Silicon Valley. He contributes to Big Picture, an opinion column that appears every week on TIME Tech.

How Communication Will Evolve Through Digital Touch

It’s not hard to look back at innovation cycles to see how technology advancements have impacted how we communicate. From the pencil to the printing press to computers to the Internet, and more recently, our smartphones, each has evolved communication in some way.

Each innovation has brought with it the ability to communicate both verbally and non-verbally in new forms. The telephone itself made verbal communication possible from a distance. Computers brought non-verbal communication into the digital era, evolving physical written letters into a digital form capable of traveling at near real-time speeds. The cell phone made long-distance verbal communication possible from any location. Smartphones further made the full spectrum of verbal and non-verbal communication possible from just about any location.

However, what do we learn when we study these technological advancements and how they have evolved our communication methods? We learn that ultimately, we have enabled new context in which to communicate digitally. In essence, technology has brought more communication options.

For example, prior to cell phones, many of us had pagers. The pager was basically an extension of the fixed landline. Someone could page you with a number and you would go to a fixed-line phone and call the person back. As teenagers, we created numeric codes to send messages: 43770 was “Hello,” for example; 143 was “I love you.” Effectively, every number or number combination had an alphabetical-letter equivalent. Looking back, this was essentially an early form of text messaging which, in and of itself, was a new option for communication. Not all conversation requires a lengthy voice dialogue. More often than not, short messages can suffice. It is the options that technology brings us that allow us to communicate in different ways depending on the context of the conversation.

Many of you will also remember your first experiences with a BlackBerry. There was something profound about being able to see your email from a device other than your personal computer. We learned very quickly that, for some emails, quick responses would suffice and that the BlackBerry was great for this. But for other emails, a more lengthy response was necessary. For these tasks, we would return to the PC. The context of the response dictates which device we use in a multi-device world. This is what I mean by technology giving us options. Prior to the BlackBerry (or Palm Pilot, etc.), the PC was our only option for both long- and short-form email communication. As innovations like the BlackBerry were created, we were presented with more options.

Digital Touch

There are plenty more examples I can dig into but I wanted to frame the points above to turn our attention to smartwatches in general and the Apple Watch in particular. While dozens of questions remain about the Apple Watch, it is perhaps its potential to add a new communication element I find most intriguing at this point. Despite what I mentioned above about humans communicating through verbal and written forms, I left out another vital communication tactic: the physical one.

As part of my continuing study of humans, I became aware of some of the modern research on the science of touch in human communication. This article in particular from Berkeley is a good starter on the subject, and this line is one of the most interesting:

In recent years, a wave of studies has documented some incredible emotional and physical health benefits that come from touch. This research is suggesting that touch is truly fundamental to human communication, bonding, and health.

The physical connection has been proven time and time again to be essential to healthy relationships. A series of studies highlighted in the report showed how people, even strangers, can communicate emotion through touch. Touch is an essential part of how we communicate. It is very personal and very intimate, yet is foreign to the digital world.

What Apple is presenting with the Apple Watch appears like it may be the start of bringing digital touch as a communication method to the digital age. And if we think about the type of device that makes this type of digital touch communication possible, it makes sense it is done through a device we wear rather than one we keep in our pockets or bags.

In the same way technology has expanded our communication options, it has still not replaced many of our existing communication methods. In a way, communication has been extended through technology, but not all prior forms have been made obsolete. Similarly, digital touch will not replace human contact, but when we are away from our loved ones, digital touch has the potential to extend that unique and intimate communication method in ways not possible before.

Bajarin is a principal at Creative Strategies Inc., a technology industry analysis and market-intelligence firm in Silicon Valley. He contributes to the Big Picture opinion column that appears here every week.

It’s interesting to read all the coverage Apple got for its watch announcement, and the amazing amount of analysis and predictions that came out shortly after the launch event.

Critics went after everything, from style, form and function. Others lauded its design, potential capabilities and eventual usefulness.

Part of this discrepancy in views is due to the fact that while Apple did show us the watch and give us some early details about what it would do, the company didn’t actually give us a lot of details about things like costs, storage, future apps and security features that could help people develop a more informed view of the product.

Since it doesn’t come out until sometime in early 2015, there’s a lot of time for speculation. And even though we have some solid details we can use to try and draw some conclusions about its potential success, I would like to suggest that to actually try to predict the future success of the Apple Watch today would just be folly. We only have the bits and pieces that Apple wanted to share; it’s not enough to really determine how this product will fare when it finally reaches the market next year.

Why Unveil It So Early?

Many people thought it was odd for Apple to introduce a product like the Apple Watch months before it will ever come to market. For one, it gives competitors a lot of time to try and create something similar that can compete with the Apple Watch when it ships. It also gives the media, detractors and a whole host of folks plenty of time to try and guess what Apple’s really doing and whether it’ll actually have any serious impact on Apple’s bottom line. Given Apple’s penchant for secrecy, one would think that it would have been smarter for the company to hold off announcing the watch until a day or two before it would actually ship.

For those of us who follow Apple very closely, this move, while unique, was a necessary for a couple of reasons. First, this is a brand new category for Apple and the watch market is very complex. Apple actually needs real feedback from people in the watch, entertainment, fashion and tech worlds in order to help refine the final product.

However, there’s another critical reason that the watch was unveiled months before it’s supposed to come to market, and it’s one of the major reasons why it’s impossible to actually predict its success at this time in Apple’s history.

Much More Than Hardware

The proper way to actually view the new Apple Watch is to see it as a platform that includes more than just hardware. It has to have apps and services designed for the new, smaller-screen form factor. This actually follows Apple’s overall formula for success.

Before the company introduced the iPod, it spent two years working with the music industry in order to have media content available for use on the iPod when it shipped. The same thing happened with the iPhone. Apple had to create a special SDK (software development kit) so the developer community could create apps for the new smartphone. While Apple did have its own apps and some special partner apps at launch, the software community moved rapidly to create apps and services for the new iPhone, which ultimately is why people actually buy an iPhone these days.

This similar approach was used when Apple introduced the iPad. At launch, the company had some of its own apps and a couple from partners — and in this case, it could use iPhone apps, although they had to be upscaled up for the iPad’s larger screen. But the software community soon created native iPad apps, and Apple’s tablet took off. In the end, with all three of these products, it’s all about providing customers with hardware, a rich operating system, apps and services.

Waiting for the Killer App

This will be the same case with the Apple Watch. We need a lot more info about what it can do, how it works and, of course, the ultimate value proposition of what it will deliver those who buy it. But the really important unknown factors lie in the types of apps that can be created for such a small screen, and if any “killer” apps emerge that take it from a “nice to have” device to an “everyone needs one” type of product.

The best example of a killer app came from the birth of the PC era. Apple introduced the Apple II computer in 1977, but at the time, it was viewed only as a hobbyist machine. Then in 1979, a program was created that ran on the Apple II called VisiCalc, which was the first spreadsheet. It literally became the killer app that brought the Apple II out of the hobbyist category and into the world of business computing. A they say, the rest is history.

The second killer apps were the word processors that came out about the same time, followed by a product called Lotus 1-2-3 that included a spreadsheet, graphical charts and a database. This was the first killer app for the IBM PC when it came out in 1983, launching the true PC era we know today.

The importance of apps was driven home to me when the iPhone was first launched. When Apple SVP Phil Schiller first showed it to me, he put his iPhone on the coffee table in front of me and asked me what I saw? I told him I saw a blank piece of glass in a metal case. He said that was exactly what Apple wanted me to see until I turned it on. The magic would come from the apps on the device itself. While the hardware is important, he stressed that it would be the apps that make the iPhone dance and sing.

After the launch of the iPhone, I talked to Steve Jobs and asked him if he was certain he had a hit on his hand with the iPhone. He told me he was pretty sure the iPhone would be important, but went on to say that it would be the apps that third-party vendors create that would ultimately make it successful. He also told me that the exciting thing for him was that Apple had developed an SDK to create apps for the iPhone and that he couldn’t wait to see what software developers created.

This really is the formula for the success of any device like this. A company can create a great piece of hardware, but the magic comes from the software community. Who will create the “killer” app or apps that make the device appealing to everyone?

While we only have part of the story about the Apple Watch from Apple, I suspect that even when it launches, we won’t really be able to judge its ultimate success at first. However, I am betting that Apple gets strong support from the software community, who will create a host of apps that may appeal to people from all walks of life. That will ultimately determine the success or failure of Apples new watch.

Bajarin is the president of Creative Strategies Inc., a technology industry analysis and market-intelligence firm in Silicon Valley. He contributes to Big Picture, an opinion column that appears every week on TIME Tech.

Why Apple Didn’t Use Sapphire iPhone Screens

Early last month when I was on my weekend hike, I accidentally dropped my iPhone face down on the cement.

As you might expect, the screen broke and made it unusable. Thankfully, I was able to get a Genius Bar appointment at the Apple Store that same afternoon and got the screen replaced for the hefty price of $150.

So in a column I did recently about what I wanted in a new iPhone, I lamented about my iPhone breaking and said I wanted a sapphire screen on any new iPhone I might buy in the future. I formed that opinion because of all the hype surrounding Apple buying $578 million worth of sapphire in way of partnership with GT Advanced, a sapphire manufacturing company. All of us assumed that this meant Apple would put sapphire screens in the new iPhones, but when it didn’t happen, I started digging into why this was not the case.

What I have learned about this issue and why Apple chose not to include sapphire in the iPhone 6 line is fascinating and reinforces to me why all of us need to be more careful before jumping to conclusions in areas like this.

Many have suggested that the decision not to use sapphire was the result of manufacturing issues – that with more time, Apple would have used sapphire screens for the iPhone 6. As I looked closer at the Apple announcement, and after looking more at the benefits and drawbacks of sapphire, it seems that Apple had good reasons to go with ion-strengthened curved glass (Gorilla Glass) instead of sapphire.

While sapphire has been hyped as an alternative screen cover for smartphones, the continued use of strengthened glass has less to do with production issues and more to do with what smartphone manufacturers know about consumers, their preferences and, more importantly, how people actually use phones and what they’re willing to pay for them.

By the way, some reports stated that up until a few weeks before the iPhone announcement, Apple was going to use sapphire but dropped it because of yield issues. This is not true. My sources tell me that sapphire was never targeted for the iPhone 6 or 6 Plus and its role in future iPhones hasn’t even been decided yet. Also, anyone who knows the manufacturing process knows that to make tens of millions of screens for an iPhone launch, the orders for those screens had to be put in place well over six months ago and planned meticulously into the final manufacturing of these new smartphones.

Here is what I was able to find out about sapphire versus glass by doing many interviews and looking at the current research:

Design

The trend in smartphone design is to achieve thinner, lighter devices, while making them bigger at the same time. That’s not easy to do. To increase the size of a smartphone and still keep the weight down requires thinner, lighter material. What we know about sapphire is that it is more than 30% denser than glass and would require a compromise on both fronts for widespread use in phones. Corning has shown that it can manufacture Gorilla Glass to be thinner than a sheet of paper and strengthened with a process that makes it more damage resistant. Design flexibility and adaptability are important. The latest smartphone designs from Samsung, Apple and others include sleek displays with glass that curves to the edges of the devices. Because glass can be manufactured to extremely thin dimensions and still be chemically strengthened, it’s more flexible and can be formed and shaped into the sleek designs you see in the iPhone 6 and others. Sapphire is bulkier and must be cut into shape, creating both cost and production issues on larger surfaces.

Cost

Cost is a big factor with consumers, and the smartphone category is hugely competitive these days. Apple is already pushing the high end on price as comparable devices are priced at or lower than the iPhone 6, and it would have had to charge even more for a sapphire-covered phone. The cost to produce a sheet of sapphire is estimated to be roughly 10 times that of strengthened glass. In fact, one source I talked to said that cost could be even higher. Our researched opinion early on was that if Apple did add a sapphire screen to the new iPhone, it would add at least $100 to the base cost. That could be a deal-breaker for mainstream iPhone customers.

Battery Life

By far, the number one phone-related complaint from consumers is battery life, so manufacturers look at every component that draws energy and work to minimize the impact of each. And one of the biggest drains on battery life is the brightness of the screen. According to Bernstein Research — which conducted research on the benefits of glass versus sapphire as a cover material — glass transmits light much better than sapphire. Therefore, to get the same level of brightness using a sapphire screen requires more energy. That problem can’t be fixed easily, as the basic properties of sapphire make it transmit less light than glass. This also impacts other things like glare. Glass can have an anti-reflective solution embedded into the material, reducing the effects of the sun when reading outdoors. To achieve anti-reflection with sapphire, it has to have a coating applied which, over time, will wear off. This issue alone may make it tough for Apple to ever use sapphire in future iPhones, since most people have their iPhones for at least two years.

Environmental Impact

Manufacturers know that consumers are starting to care a lot more about the impact that the products they buy are having on the environment. Sapphire requires 100 times more energy to produce than glass. The energy requirements alone make sapphire problematic as a viable material to use on a smartphone. None of the folks I talked to had any idea how they could solve this problem given the nature of the material itself.

Durability

This is by far the most promoted benefit of sapphire, and perhaps the most misunderstood. This is the area I got tripped up by assuming too much from Apple’s investment in GT Advanced. Sapphire is extremely hard, which is to say highly scratch resistant. That is why it is found on products such as luxury watches. It is largely untested on phone screens, though. In fact, sapphire is a crystal that is very hard, but inflexible and extremely brittle. Sapphire’s inherent structure makes it susceptible to flaws that can occur along the crystal plane. I was told by multiple sources that various field tests subjected sapphire to scratch and break tests against strengthened glass. It performs better on scratch resistance, but when you drop it, it is more likely than glass to break. Glass actually flexes and can absorb the shock of a drop more successfully than sapphire. Sapphire is prevalent on luxury watches and other products that don’t experience the same drop risk as smartphones.

Like many who jumped on the sapphire bandwagon without really understanding it, I had assumed that it was unbreakable. But in talking to various experts, they said that the way to look at this is to think of a sheet of ice (also a crystal); small cracks weaken the surface and it will hold together for only so long before some impact will cause it to break. Those small cracks add up like the normal wear and tear we put our phones through every day – knocking around in our purses and pockets with keys and change, or scuffing against the surface of a counter repeatedly. Current solutions, such as Gorilla Glass, apparently are reinforced with a chemical that alters its atomic structure and actually strengthens the area around scratches to insulates the glass longer against breaking. While surface scratches may be more visible earlier on, a glass screen will stay more intact over time than a sapphire one. Once sapphire is exposed to a scratch or a flaw, visible or invisible, its risk of breakage and eventual failure is high. On watches, this is less of an issue because they are seldom dropped and the watch surface is smaller. But in a smartphone with a larger screen and many usage variables, it’s difficult to guarantee that it’s less prone to breakage.

I don’t doubt that over time, there could be some breakthroughs with sapphire and new coating processes that could make it possible to use on a smartphone. However, from the research I did, it does not appear that it could happen anytime soon. Plus, sapphire’s less flexible and more brittle nature suggests, as least to me, that using it in large-screen smartphones would still be difficult — even if it was possible to coat it in a way to keep the screen from splintering. I now at least understand why Apple didn’t use it in the new iPhones — and the more I study this, it seems that it could be problematic for Apple to use sapphire outside of its smartwatch line anytime in the near future.

Bajarin is the president of Creative Strategies Inc., a technology industry analysis and market-intelligence firm in Silicon Valley. He contributes to Big Picture, an opinion column that appears every week on TIME Tech.

If the World Was a Village: Tech Edition

Earlier in the year I wrote an article called Computing’s S-Curve. We are on the path to connecting the planet via pocket computers. This is so incredibly significant that it’s difficult to overstate.

In many of the presentations we give at Creative Strategies, we emphasize that we are still early in the technology age. We point out that the first 25 years of computing were focused on bringing computers to business. The next 25-plus years will be focused on bringing computers to every person on the planet. Much of this is driven by Moore’s Law.

When presenting to more PC-focused audiences, this is a favorite slide for emphasizing the role Moore’s Law plays in bringing computing to the masses:

Ben Bajarin / Creative Strategies

We still have a long way to go but as Benedict Evans points out, this opportunity to connect the planet is hugely beneficial from humanity’s standpoint.

So where are we when it comes to connecting the planet today? Using a range of statistics I gathered, I made a chart showing a few of my favorite data points, asking, “If the world was a village of 100 people, how many would be using what technology?”

Ben Bajarin / Techpinions

What strikes me about these statistics is that only one of them is over 50%. The mobile phone (not smartphone) is in use by 63% of the global population. Many of these mobile phone users have multiple subscriptions, which is why the latest data from the ITU pegs total mobile subscriptions at nearly 7 billion.

What makes mobile phones — with 63% percent of the global population owning one — interesting is that by 2020, those will all be smartphones. To help drive that transition, we now have smartphones that cost $33 and we will have $10 smartphones by 2020.

This chart shows the percentage of smartphone users and non-smartphone users in each of these large global markets. I’ve added their respective population as well in order to see the opportunity for growth and scale.

As we embrace this shift, we realize how valuable these mobile phones are, particularly to those in emerging markets. Internet-connected mobile phones have given rise to the WeChat businesses, Instagram businesses, Facebook businesses and more. People like to argue that you need a PC to do work. Tens of millions of consumers (and growing) in emerging markets prove this wrong every day.

As we empower billions of new consumers with pocket computers ubiquitously connected to the Internet, it is bound to have an impact on the economies of these emerging markets. Economists estimate that bringing connectivity to a market can increase the GDP of that region anywhere from 1-3%.

The Internet has been one of the most critical and disruptive inventions of our era. Bringing the Internet to nearly everyone on the planet may be even more disruptive when all is said and done.

Connecting the Planet, Reshaping Industries

Mobile’s impact will be widespread. Note this chart from Chetan Sharma Consulting.

There are 14 global trillion-dollar industries; mobile has the potential to invade, change and impact them all. In this white paper, Chetan argues that we are entering a new era of connected intelligence. He is correct, and it will be driven by two fundamentals: the connecting of the planet via mobile devices and the connecting of nearly everything else to the Internet.

When we state that the technology industry’s best days are ahead, it is for the above reasons and more. While we explain that the next 25-plus years will be focused on bringing computing to the masses, the next 50-plus years will be spent bringing computing to nearly everything.

San Francisco 49ers Go Long on STEM Education at Levi’s Stadium

In 2010, when the San Francisco 49ers’ brain trust was drawing up the plans for what is now Levi’s Stadium, they went to one of the tallest buildings in the area and looked out over Silicon Valley.

According to Joanne Pasternack, director of community relations and the 49ers Foundation, these executives could see Google, Intel, Apple, HP, Facebook and many of the leading tech companies in the world laid out right in front of them.

It was at that point that they made the commitment to somehow use the new stadium to help create tech leaders of tomorrow. As one of the 49ers execs told me recently, they wanted to “help develop the people who will someday engineer and create greater features for Levi’s Stadium and develop innovative technologies that can impact the planet in the future.”

Educational Roots

The 49ers have had a long history of supporting education. “Our family has always been interested in education,” said Dr. John York, co-chairman of the San Francisco 49ers. “My father-in-law, Ed DeBartolo, Sr., always felt that if you could give people an education, they can make a way for themselves and their lives. And the 49ers Foundation’s mission has been to keep kids safe, on track and in school.”

“My mother was a school teacher, my father was the son of Italian immigrants,” said Denise DeBartolo York, co-chairman of the San Francisco 49ers. “They always thought that education could level the playing field with at-risk students that were disadvantaged. Once you enable them to get an education, it’s an even playing field.” Mrs. York also told me that she and her husband, Dr. York, have contributed significantly to various underprivileged children’s causes and Title I school initiatives, as well as programs for at-risk kids.

The 49ers organization’s philanthropic contributions — much of which is focused on education — are at least $3.3 million per year. For years, the organization has supported what is called the 49ers Academy in East Palo Alto, CA. According to the academy’s website:

The San Francisco 49ers Academy was established through a partnership with Communities in Schools (CIS) in 1996. CIS started as a small grassroots movement led by Bill Milliken, one of the nation’s foremost pioneers in the movement to help young people graduate from high school and go onto rewarding careers. The 49ers Academy is a unique partnership – a public school, supported by a private non-profit agency. The 49ers are the major underwriter of this program.

Cultivating STEM

However, what they are doing in STEM education at Levi’s Stadium itself is amazing. STEM stands for Science, Technology, Engineering and Math and is a dedicated educational program to get kids interested in these disciplines, eventually guiding them into related career endeavors.

“On and off the field, talent alone will not lead to success,” said Dr. York. “The game changer for promising future leaders is to provide a stimulating environment where their natural talent and drive will be fed by motivating mentors, meaningful activities and academic enrichment. The 49ers STEM Leadership Institute’s vision is to be a leader in STEM education, preparing and inspiring talented learners to meet the challenges of the global society through innovation, collaboration and creative problem solving.”

Budding Brains

The 49ers STEM Leadership Institute program will bring 20,000 students to Levi’s Stadium for daylong programs that tie sports and education around the STEM focus. Each day during the school year, 60 kids from one of the various schools in the Bay Area are brought to Levi’s Stadium in one of the 49ers’ official team buses. They are then broken up into three different groups of 20 each to rotate through three distinct activities.

The first activity features a full tour of the stadium, focusing on the engineering involved with creating a stadium. It shows off the green aspects of the stadium, including a visit to the garden on the roof as well as a look at the solar panels and how they’re used to create energy. The tour also demonstrates how clean technology is used to irrigate the field in order to care for the grass and turf. The kids also get to see the visiting team’s locker room, the field and many of the public areas of the stadium.

The second activity takes place in the new 49ers Museum and includes lessons using various games and interactive screens. Students learn how engineering and math are used to create 49ers football equipment, and how physics is applied to things like passing, kicking and running. The day I was there, they also included a section on careers in math and science. By the way, a trip to the 49ers Museum is highly recommended. It’s one of the best sports museums in the U.S. They use Sony Xperia tablets and various technologies to really enhance the overall museum experience — and for those of us in the Bay Area, it evokes some great memories of five 49ers Super Bowl wins.

The third activity takes place in an actual high-tech classroom that’s built into the new 49ers Museum. This classroom has multiple screens as well as half a dozen touch-based video worktables created by Cortina Productions. They serve as interactive teaching tools that the students can use to do various projects.

I was privileged to attend the inaugural class where they were studying the engineering principles of making a football. Using all of the materials needed to make a football, each group got to assemble a football from scratch, sew it up, inflate it and then test it in a special kicking area where the students could see how each ball performed based on how well they created it.

Terrell Lloyd / San Francisco 49ersDenise DeBartolo York helps students assemble a football at the 49ers STEM Leadership Institute at Levi’s StadiumTerrell Lloyd / San Francisco 49ersStudents assemble a football at the 49ers STEM Leadership Institute at Levi’s Stadium

Many of the 49ers star players become the students’ tutors and team captains via video at each workstation table, giving instructions and encouragement for each project.

The interactive lessons vary: One class might teach how a helmet is engineered. Another might be on the physics of throwing a ball, explaining how a physical object like a football deals with airflow, throwing mechanics and force, and how each impacts the direction and length of a throw. There are even lessons on engineering your plate, including nutrition facts and a fitness class that uses the 49ers’ training camp as an example.

The class on applied mathematics explains angular attack and game geometry as well as teaching about statistics, using the Super Bowl and its various Roman-numeral numbering schemes as part of the lesson plan. All lessons are designed to emphasize how math, science, technology and engineering are used in everything from building a stadium to creating sports equipment to the math and physics that go into playing the game of football.

The teacher of the class is Matt Van Dixon, who is the education program manger for the 49ers Museum. Matt is one of the most dynamic teachers I have ever observed, his teaching style grabbing the kids from the beginning of each class. I was extremely impressed with how he developed the lesson plans to integrate the role of engineering and math into all of the sports examples. He and his team created various simulations to make the class interactive and highly entertaining. I asked a couple of kids who were in this inaugural class what they thought about the program and each gave it a huge thumbs up.

Branching Out

The 49ers STEM Leadership Institute has also been implemented in the Cabrillo Middle School in Santa Clara, CA, which is just down the street from Levi’s Stadium. With the 49ers’ support and big help from the Chevron Corporation, who created the STEM labs at the school, 60 students from the Santa Clara Unified School District are selected each year to go through a six-year program designed to inspire and prepare students with high academic potential to pursue STEM majors at top-tier universities and become future leaders in their fields. In addition to enriched math and science instruction, students have regular access to the Chevron STEMZone, a tech lab equipped with a laser cutter, 3D printers and other fabrication tools.

Steve Woodhead, Chevron’s global social investment manager, told me that when the 49ers approached them to help with the STEM Institute, they were glad to be involved and worked hard to create the learning labs used in these special education programs.

Another important partner in this program is the Silicon Valley Education Foundation. SVEF’s charter is to be a resource and advocate for students and educators. They provide advocacy, programs and resources to help students reach their full potential in the critical areas of science, technology, engineering and math. According to Muhammed Chaudhry, president and CEO of SVEF, his non-profit group played an important role in advising the 49ers and Chevron on STEM studies and helped with the development of the curriculum used in the institute’s educational programs.

What the 49ers are doing is using sports — a subject that most kids understand and can relate to — and tying it to math, science, technology and engineering in a way that brings these disciplines to life, making learning these subjects fun and entertaining. Getting to see this program in action was truly enlightening. I saw how the 49ers’ STEM Leadership Institute could help create future tech leaders, the major goal of their vision and program from the start.

I hope that all of the folks in the sports industry school themselves on the 49ers’ pioneering STEM education program and how it takes full advantage of the role sports can play in teaching STEM-related disciplines.

Bajarin is the president of Creative Strategies Inc., a technology industry analysis and market-intelligence firm in Silicon Valley. He contributes to Big Picture, an opinion column that appears every week on TIME Tech.

The Future of Tablets? Market Segmentation

The tablet market is one that has greatly polarized many who follow the technology industry.

The initial debate centered around whether the tablet would kill the PC. Then, the tablet market began to slow from its once triple-digit annual growth rates to much more modest single-digit growth rates. The market for tablets is still growing in terms of annual sales, just not as much as it did in 2011 and 2012.

The tablet remains an important product and it will continue to evolve, but one trend we see happening may shed some light on what we can expect for the future of tablets.

It appears the tablet is segmenting. This is something our firm has been highlighting for some time in our tablet presentation:

Creative Strategies

We are starting to see tablets being built for kids, tablets being built just to consume content and media, tablets that can replace PCs, and now with the latest entrant from Nvidia, we see tablets being specifically built for hardcore gamers.

The market appears to be segmenting. Part of this has to do with the diversity of the pure-slate form factor. The design itself opens up the possibility that, through software, tablets can appeal to a wide range of use cases. This is what makes the tablet form factor so exciting.

Segmentation in many markets is not new. Specifically in the PC market, desktops and notebooks are examples of purpose-built segmentation. PC gaming machines are another example of segmentation. So it isn’t surprising that we’re seeing segmentation in the tablet market as well.

People often criticize segmentation without realizing that these are very good business moves. The Nabi kids tablet, for example, sold nearly two million units in the U.S. during the holiday quarter last year. Nvidia’s creation of the Shield tablet may be an even smarter move still. The hard core PC gaming market may not be the largest one but it is still lucrative. DFC Intelligence estimates there are upwards of 270m core PC gamers.

However, to target these segments, companies have to truly understand the market they are building for and make products uniquely tuned to fit their needs. The Nabi tablet includes custom software for kids. They offer a range of tablets targeting at different age groups and create custom experiences just for those age groups.

The Nvidia Shield tablet has a hardcore gaming processor and can stream games over a Wi-Fi network from the gamer’s computer to the tablet, which can in turn connect to a TV. By giving gamers access to all their PC games in mobile form on a tablet, Nvidia has custom-built experiences for its tablet that check the necessary boxes for serious PC gamers.

I expect more segmentation to come as hardware manufacturers discover parts of markets that are underserved or not served at all. Ultimately, this segmentation is what can continue to fuel the tablet market. There are all types of every day use cases for tablets: Many will be general purpose like the iPad, but many will target certain verticals like the ones I mentioned above. Despite anyone’s opinion on the tablet market, I remain bullish on its future.

Bajarin is a principal at Creative Strategies Inc., a technology industry analysis and market-intelligence firm in Silicon Valley. He contributes to the Big Picture opinion column that appears here every week.